When you’re buying a property, you’ll no doubt hear the topic of title insurance come up from time to time. If you find the term a bit confusing and want to understand it better, no worries! You are most certainly not alone. After all, a home is one of the biggest investments most of us make in our lives, so it’s important to understand the transaction as much as possible.
To help you on your way, our experts have tackled some of the Frequently Asked Questions (FAQs) about title insurance. As you may know, a title establishes your rights to use your property and own it, and also specifies any limits to those rights. Now let’s take a closer look at why you would want title insurance.
FAQs related to title insurance
What is title insurance?
As a homebuyer, you want to protect your investment; title insurance is a policy that does just that. With title insurance you not only protect your investment in your new home or property but you also protect your rights to that property. Title insurance comes in two forms: a lender’s policy, which is required to protect the mortgage lender and an owner’s policy which offers the best protection for you, the buyer.
What’s a title search?
When you purchase a home, a title search is conducted to illuminate any title defects, so they can be addressed. Title defects are any issues that could prevent you from using the property as you envision. When a title professional conducts the title search and finds that there is a clear title, or all defects have been addressed, the title company can then supply a title insurance policy.
Should I purchase owner’s title insurance?
To put it simply, owner’s title insurance protects you and your property purchase. If title defects come to light after you’ve bought the property, which does happen, you could find yourself battling legal issues related to ownership of the property. For example, an undisclosed heir to the property could lay claim to it. An estranged spouse could come forward and claim ownership. Or there could be liens and encumbrances against the property that you don’t know about. Fraud, forgery, legal action and paperwork errors could also come to light.
Revealed after you’ve bought the property, these can create massive legal hassles and can keep you from doing what you wish with your investment. Owner’s title insurance will cover any related court costs or legal fees that come up for claims covered under your policy.
What does it cost to purchase owner’s title insurance?
When you do the math, owner’s title insurance is an affordable form of protection for you and your investment. The cost of owner’s title insurance depends on the value of the home. Typically, it costs about half a percent of the amount you paid for the property. For that, you get coverage for as long as you and your heirs own the property. Plus, unlike most other kinds of insurance, you only pay a title insurance premium once; there are no ongoing payments.
Title Insurance: Your Ticket to Peace of Mind
Title insurance may sound like another confusing aspect of buying a property, but to put it simply, it protects you and your purchase so that you can enjoy your investment as you intend to. Without it, you might never know what issues could arise until it’s too late. But with title insurance, you can have the peace of mind that comes from knowing you’ve done due diligence and that you’re covered should any unexpected title surprises.